Tuesday, February 23, 2016

NUMBER 6: Krugman Smacks Sanders Growth Projections Again

This is the sixth attack by Paul Krugman on the argument made by Gerald Friedman, the University of Massachusetts at Amherst economics professor, who wrote a paper projecting spectacular growth if Bernie Sanders socialist policies were to be implemented.

It's Krugman's worst attack in the sense that it is filled with Keynesian gobbledygook, and after Friedman's shot against him, he leaves Friedman's name out of it, but it is about the Friedman analysis.

In Friedman's off-the-wall analysis he projects Bernie style socialism will bring 4.5% annualized growth over 10 years. Krugman responds in a post titled Realistic Growth Prospects. Here's the best part of it :

And nobody knows the secret of raising productivity growth. In general, any economist talking about potential growth should start from a position of modesty: nothing in what we know or have experienced in the past justifies making big promises. By all means we should try everything we can think of — but our policies should make sense even if it turns out that the effects on long-run growth are modest.

What I would say is that it’s unreasonable to assume growth over the next 10 years more than a fraction of a percentage point above 2 percent — say 2.5 percent at the upper end. Maybe we can do better, but we shouldn’t count on it.